Skip to content

CMA Final · Corporate Financial Reporting · Consolidated Financial Statements and Separate Financial Statements

Under Ind AS 110, consolidated financial statements are described as the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity. Parent P Ltd sold goods costing Rs 80,000 to its subsidiary S Ltd for Rs 1,00,000. S Ltd sold all of these goods to outside customers for Rs 1,30,000 in the same year. What amount of revenue from these goods should be shown in the consolidated statement of profit and loss?

Consolidated revenue is Rs 1,30,000. The group is a single economic entity, so only the sale to outside customers counts. The Rs 1,00,000 sale from parent to subsidiary is internal and is eliminated on consolidation, along with the corresponding purchase.

  1. ARs 2,30,000
  2. BRs 1,00,000
  3. CRs 1,30,000Correct
  4. DRs 30,000

Explanation

As a single economic entity, the group's only external sale is S Ltd's sale to outsiders for Rs 1,30,000. The intra-group sale of Rs 1,00,000 and the matching purchase are eliminated. Rs 2,30,000 wrongly adds the intra-group sale to the external sale. Rs 30,000 is S Ltd's profit, not revenue.

Did you get it right without looking?

One question tells you little. A timed set on Consolidated Financial Statements and Separate Financial Statements shows your real accuracy, how long you take and where you lose marks.

Practise Consolidated Financial Statements and Separate Financial StatementsFree diagnostic mock

More Consolidated Financial Statements and Separate Financial Statements questions